Oil falls as demand, inventories weigh

By Edward McAllister

NEW YORK (BestGrowthStock) – Oil prices fell toward $84 a barrel on Monday as concerns about U.S. demand and inventory levels outweighed early support from strong Chinese crude imports and a weak dollar.

U.S. oil for May delivery fell 58 cents to settle at $84.34 a barrel, after earlier rising to $85.71 a barrel. London Brent crude fell 6 cents to settle at $84.77, moving to a premium above U.S. West Texas Intermediate crude, also known as WTI.

WTI last consistently traded at a discount to Brent in December, with traders citing rising U.S. inventories and weak demand as part of the move on Monday.

“International demand … is having a more positive impact on Brent than WTI,” said Christopher Bellew, broker at Bache Commodities, commenting on Brent’s rise above WTI.

“U.S. crude oil stocks are high and WTI has its limitations as an (international) marker price because it is based on a landlocked crude, well away from the coast.”

The euro rose to its highest level against the dollar in nearly a month on Monday on the Euro zone’s plans to aid Greece, which provided early support for crude. But gains eroded as investors questioned whether current prices were justified, given the fundamentals.

“Initial enthusiasm for the plan to help Greece did not increase oil demand. The larger view must be that the sentiment pendulum has shifted at least temporarily back toward skepticism about whether demand has recovered enough to support current prices,” said Mike Fitzpatrick, vice president at MF Global in New York.

U.S. crude oil inventories likely rose last week for the 11th week in a row, on higher imports, a Reuters poll ahead of week inventory reports showed on Monday. (EIA/S: )

Crude stockpiles were seen up by 1.6 million barrels in the week to April 9, according to the preliminary poll of 10 analysts. Distillate stocks were expected to show a 1.0 million barrel build while gasoline stocks were anticipated to have fallen 700,000 barrels.

Chinese crude imports jumped 13.8 percent from the previous month and reached 4.95 million barrels a day, preliminary data released by the General Administration of Customs showed.

“The weaker dollar and strongly bullish Chinese data should be very positive for oil,” said Daniel Briesemann, commodities analyst at Commerzbank. “Of course fundamentally, these high oil prices cannot be justified, but based on sentiment, the market still has room to go up, we think.”

Technical chart analysts said the oil market was running out of upward momentum after a sharp rise in prices at the end of March and in early April. The pull-back came despite factors that analysts said were supportive for the market.

(Additional reporting by Gene Ramos and Robert Gibbons in New York, Fayen Wong in Perth, Christopher Johnson in London; Editing by Lisa Shumaker)

Oil falls as demand, inventories weigh